As the US dollar has continued to struggle amid recent US economic data and global trade war concerns, EUR/USD has sustained a prolonged trading range that is not far off its January and February multi-year highs. Currently fluctuating around its key 50-day moving average, EUR/USD remains entrenched for the time being within a clear bullish trend that has been punctuated by persistently bearish dollar sentiment.

That bearish sentiment was exacerbated this past Friday when the US jobs report for March came out worse than expected both in the headline number of jobs created as well as the unemployment rate. As the dollar fell on that jobs disappointment, reversing its prior attempt at a rebound, EUR/USD was boosted from a major uptrend support line that extends back one year to April of 2017.

The US Producer Price Index, a key measure of inflation, was released on Tuesday morning. Both the headline PPI (+0.3% vs +0.1% expected) and Core PPI (+0.3% vs +0.2% expected) were higher than expected, which helped give the dollar a modest initial boost after days of heavy pressure. More critical tests for the dollar will come on Wednesday, when the March Consumer Price Index and minutes from the last FOMC meeting will be released. The CPI is expected to show flat consumer inflation for March, while the core CPI (excluding food and energy) is expected at +0.2%. As for the Fed meeting minutes, the market focus will be on the extent of Fed hawkishness against the backdrop of inflation and global trade that were expressed during the March FOMC meeting. That meeting resulted in the first rate hike of the year and was the first such meeting helmed by new Fed Chair Jerome Powell.

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Aside from the noted US releases, this week will also feature minutes from the European Central Bank’s last meeting in March. During that meeting, ECB President Mario Draghi left rates, policy, and forecasts largely unchanged but also dropped the central bank’s longstanding easing bias, hinting that ECB stimulus may be ending sooner rather than later. But Draghi downplayed this more hawkish stance, which helped to result in a drop for the euro. On Thursday’s ECB minutes release, the focus will continue to be on speculation over the end of stimulus and the potential for an interest rake hike on the horizon.

Amid these key releases from both the US and eurozone, EUR/USD continues to trade with a longer-term bullish bias for the time being. However, any trigger that boosts the dollar and/or pressures the euro this week has the potential to result in a possible trendline breakdown for the currency pair. In this event, such a breakdown could first target 1.2200-area support followed further to the downside by the key 1.2075 support zone.

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